Arch sells Hazard thermal coal mining complex

Arch Coal has sold its Hazard subsidiary to Blackhawk Mining, for US$ 26.3 million. The sale includes the Hazard thermal coal mining complex and related infrastructure, in addition to approximately 38 million t of thermal coal reserves in eastern Kentucky.

Royalty payments

As part of the sale, Arch Coal has divested US$ 15.6 million of reclamation liabilities to Blackhawk, and expects to be released from US$ 43.8 million of reclamation surety bonding. Arch also has the potential to receive future royalty payments of up to US$ 35 million in aggregate over the next five years resulting from its retention of select coal reserves at the Hazard complex.

Mining portfolio

Arch Coal CEO, John Eaves, commented: "The sale of our Hazard subsidiary demonstrates that we are continuing to streamline our mining portfolio and monetize assets that are not essential to our future growth plans. This transaction allows us to further sharpen our focus on strategic assets that have the highest return potential, such as our growing Appalachian metallurgical coal franchise and our low-cost Western thermal coal platform. At the same time, the proceeds from the sale further strengthen our already substantial cash and liquidity position."

Active surface mines

The Hazard complex includes four active surface mines - East-Mac & Nellie, Rowdy Gap, Bearville and Thunder Ridge - as well as the Teton preparation plant and Kentucky River Loading facility. In 2013, Hazard sold 1.7 million t of thermal coal and generated US$ 4.8 million in earnings (EBITDA).

Coal market environment

Eaves added: "I would like to thank the Hazard employees for their substantial efforts to reduce costs in this difficult market environment and - even more importantly - for achieving an extraordinary safety performance. In particular, the employees of Hazard's surface operations and its Kentucky River Loading facility accomplished a perfect safety rate in 2013. Blackhawk is fortunate to gain such an experienced and dedicated workforce."